I don't know about you, but I keep wondering where the disconnect is between the US unemployment rate and IT departments. And if there is a disconnect, as there seems to be from looking at the data, I am grateful on both your behalf and my own. The rest of the IT Jungle team is grateful, too. None of us - you, me or them - wants …

COMMENTS

Whats the story?

Available cash is down, companies are looking to consolidate and hold off on new projects. Spending is down on new equipment but the old stuff still needs to be maintained and if you can pick up some extra business from other companies looking to downsize their IT or escape their old support contracts with your current staff and just employ a few more basic level helpdesk employees then good on you.

This one's easy to explain

An army must have it's cooks and it medics; it's impossible to succeed without them. In the buiness world, it's the IT department. A company may scale back and do more with less people, but it has to have it's data and communications infrastructure in good working conditions. If one cuts back too far in IT, one's comany is headed for serious trouble.

You Britons may not know this, but take U.S. unemploment figures from the government with a grain of salt. They grossly undercount the number of unemployed people. Back during the Reagan administration a significan change was made to the calculation. Before then, all people who were unemployed or under-employed (working part-time, because the cannot find a full-time positiion) and actively seeking work were included in the count. The Reagan BLS changed this so that only those who were receiving their first 13 weeks of unemployment insurance benefits were counted. After that, an unemployed person is declared "chronically unemployable" and considered out of the labor market. Under-employment is now counted and reported separately. Currently, the under-employment rate in the U.S. is 14%. Add the two rates up and you see that the more accurate unemployment rate is 22.1%. That's a far cry from the "official" 8.1% lie. Were we to include the number of people who are recieving extended unemployment benefits (beyond the initial 13 weeks) and those whose benefits have run out, we'd see an even higher number. The reason for this smoke-and-mirrors approach is the same as with most U.S. Government statitsic: politics. Double-digit unemployment is not to be reported, even if it has to be eliminated through statistical manipulation of data.

Experience?

Might be because, as an industry, IT has had more recent experience with recessions/contractions than other economic sectors. To wit, around 2001 when IT was double whammied by the deflation of the dotcom bubble and the completion of Y2K projects.

@AC

What are you some sort of monkey? You are counting people that are retired and take a part time job as bein unemployed? Or students that study almost 40 hours a week and work 20 hours for a bit of pocket money as being unemployed??!! So you are cooking the books to inflate numbers, yeah, that is good, we need to count new borns as being unemployed as well as the retired. It follows your logic, BTW, maybe we should count the people that are not working after 1700 as unemployed too, becuase they are at that time. I mean that would boost the unemployment rate to almost 60 or 80%.

No surprises here

The cost of delaying a purchase is only an opportunity cost to the business. Laying off people if you expect to recover has the potential to be a huge cost. First off, you have the increases in taxes (otherwise known as unemployment insurance rates) for laying off the employees. If you employ more than 50 people, you have regulatory costs involved in making certain you jump through all the right hoops, and potential legal costs if somebody decides your paperwork wasn't in order or you discriminated against them for some unfathomable reason or another. Finally, when you do recover, odds are your former IT employee has found another job somewhere else, which means you'll spend 6-8 weeks looking for his replacement, and a year or more training him to be useful within your corporate structure. So in the initial stages of a downturn (and make no mistake about it, despite it's depth, these are still only the initial stages) you cut purchasing, not people. That impacts the manufacturing sector (Dell, HP, Lenovo) not the service sector (Programming, Networking, Help Desk). Furthermore, the pause in purchasing allows the IT shop time to focus on some of those items that further down the To Do list that only require time but normally get pushed back because they don't want equipment idling.

Oh, and the unemployment numbers aren't behaving normally this time around either. Normally after some amount of time people do normally stop looking for work and wait for the economy to get better, and those numbers properly drive down the unemployment rate. This time they aren't. Whether people think this is really different from the last few downturns in that it is going to be a long hard slog like the Great Depression was so they'd better keep pounding the pavement, or if it is that their asset losses have left them hurting so much they HAVE to be out looking for a job, they are looking for a job longer.